Correlation Between FORWARD AIR and Allegheny Technologies

Can any of the company-specific risk be diversified away by investing in both FORWARD AIR and Allegheny Technologies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining FORWARD AIR and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FORWARD AIR P and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on FORWARD AIR and Allegheny Technologies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in FORWARD AIR with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORWARD AIR and Allegheny Technologies.

Diversification Opportunities for FORWARD AIR and Allegheny Technologies

0.73

Correlation Coefficient

FORWARD AIR  Allegheny Technologies

Poor diversification

The 3 months correlation between FORWARD and Allegheny is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding FORWARD AIR P and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and FORWARD AIR is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on FORWARD AIR P are associated (or correlated) with Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of FORWARD AIR i.e., FORWARD AIR and Allegheny Technologies go up and down completely randomly.

Pair Corralation between FORWARD AIR and Allegheny Technologies

Assuming the 90 days horizon FORWARD AIR is expected to generate 1.03 times less return on investment than Allegheny Technologies. In addition to that, FORWARD AIR is 1.42 times more volatile than Allegheny Technologies Incorporated. It trades about 0.21 of its total potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about 0.3 per unit of volatility. If you would invest  4,414  in Allegheny Technologies Incorporated on April 23, 2025 and sell it today you would earn a total of  3,564  from holding Allegheny Technologies Incorporated or generate 80.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

FORWARD AIR P  vs.  Allegheny Technologies Incorpo

FORWARD AIR P

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FORWARD AIR P are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FORWARD AIR reported solid returns over the last few months and may actually be approaching a breakup point.

Allegheny Technologies

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allegheny Technologies Incorporated are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Allegheny Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FORWARD AIR and Allegheny Technologies

The main advantage of trading using opposite FORWARD AIR and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FORWARD AIR position performs unexpectedly, Allegheny Technologies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Allegheny Technologies will offset losses from the drop in Allegheny Technologies' long position.

The idea behind FORWARD AIR P and Allegheny Technologies Incorporated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.